Is The ‘Future of Media’ Undermining The Future of Media?

The invention of the World Wide Web by Tim Berners-Lee and his completion of a fully working version in 1990 allowed billions non-technical users worldwide today, to easily access information on the Internet,  invented much earlier.

Publishers of print newspapers and magazines wasted no time in taking advantage of this new medium.

 

Today there are thousands of online newspapers in almost every country across six continents, according to Onlinenewspapers.com, though it gave no world grand total nor did a Google search yield any answer.

 

The spread of broadband Internet connectivity, coupled with more advanced and sophisticated Web and digital publishing technologies, and hand-held devices such as the Amazon Kindle e-reader, the Apple iPad, Android tablets and smartphones and others to read them on.

 

All this quite literally broke the back of mainstream media as gateways for our daily dose of news and information. Remember how we waited with bated breath for CNN’s correspondent Peter Arnett’s reports via satellite phone from Baghdad every evening on Malaysian TV during the first Iraq War in early 1991, or how we eagerly waited to read about it in the morning papers over breakfast, while hoping that the paper was not wet by the rain or chewed by the dog.

 

Now, we can bypass all that and read all about the French military action in Mali online and from different perspectives too, before it appears on TV. We are no longer beholden to what a newspaper editor or TV producer decides we should read or see, while there are thousands or millions of independent websites and blogs providing alternative or opposing viewpoints from that of the mainstream media. “Power to the people!,” perhaps.

 

However, don’t blame print and broadcast media for being gateways. Printing has been a very capital and labour intensive operation since its beginning, with factory-scale printing operations employing hundreds of skilled workers and expensive printing presses.

 

Type metal block with a picture of Time of Malaya editor A. E. Moreira –  early 20th Century 

The printing press was invented in Johannes Gutenberg around 1440 and in the early days of newspaper printing, each letter was cast from molten type metal and mounted on a wooden block, each of which was manually laid out in a frame together with pictures like a giant rubber stamp. It was then inked and a sheet of paper pressed down upon it to make the impression, hence the origin of the term “press” in reference to media.

 

This painstakingly slow process was speeded up and automated by the introduction of the linotype machine in the late 19th century.

 

Essentially a typewriter with 90 keys which made made an impression of each letter in a mould. These moulds are automatically assembled in a line and when the operator judges that the line is almost complete, he raises the casing lever on the machine to send the line to the casting section where the letters is cast into a “slug” from molten type metal, after which each slug is automatically laid out in a “gallery tray” in the order they were produced.

 

However, while linotype machines were used to produce the main body of text of a common character size, headlines and pictures were still added manually. After the print run, the slugs are melted down and reused the next day.

 

Linotype was used to print newspapers, magazines and posters into the 1960s and 70s, when they were replaced by the offset lithography printing and computer typesetting.

 

Still, a printing machine could cost RM1 million or more, in addition to the cost of the giant rolls of newsprint, the workers to operate them, technicians to maintain them and transport costs of the printed newspapers.

 

Also, editorial computer systems used by major newspapers in Malaysia in the 1980s and 1990s employed specialised software from companies such as Atex, Imos and others running on minicomputers such as the Digital Equipment Corporation PDP11, and they weren’t cheap.

 

Besides that, many newspaper companies such as those in Malaysia cannot afford to maintain large teams of foreign correspondents, so have to rely for their foreign news on syndicated reports from big international news agencies and before the availability of broadband Internet, had to lease dedicated telegraphic and later data lines which could cost up to RM100,000 per year, besides the cost of the syndicated news.

 

Broadcast media was first to compete with print media and drew away some of its readership but broadcasting stations aren’t cheap either and they also require licensing and frequency allocation.

 

So with these high barriers to entry, only a few could to publish newspapers and operate broadcasting stations, hence they became gateways for distribution of news and information at affordable rates to readers, listeners and viewers.

 

Also, their relatively small number ensured that they could each attracted a large share of advertising revenue, so could employ hundreds or thousands of journalists, photographers, print operators, layout artists and administrative staff, whom were paid relatively well.

 

So the arrival of the World Wide Web let others challenge the position of print media and to a lesser extent broadcast media, to a little extent at first and progressively more as access to it grew.

 

By 15th May 1997, there were 1,715 online publications across all  continents, according to The Editor and Publisher (E&P) Database Directory of the World’s Online Newspapers. These numbers were up by 295 publications since 1 June, 1996.  Radio and TV broadcasters got on board this new bandwagon too. Back then, most Internet connections were through dial-up modems, which were slow by today’s standards.

 

All these sites were accessible free-of-charge and with the relatively small number of Internet users back then, they posed no real threat to these publishers’ print circulation or advertising revenues but were complimentary and extended their reach to readers worldwide, who otherwise would not be able to buy their publication anyway.

 

For example, The Bangkok Post, one of Thailand’s two major English-language newspapers went online on 27th March 1996 and according to Theo den Brinker, then director of Bangkok Post Internet, it was mostly a cost and conducted research & development centre, with some online advertising revenue.

 

“We estimate over 5,000 people read some part of the site every day or 25,000 different people per week. 90% overseas and we think that is big. We are also accessible world wide so the potential audience is larger, while we don’t sell many papers up-country.” den Brinker said.

 

Most Thais don’t speak English and in 2009, this writer found that while the Bangkok Post and Thailand’s other English-language paper, The Nation were easily available in Bangkok, it was not available even in 7-Eleven stores in Nonthaburi, a separate municipality adjacent to Bangkok.

Ross Dawson’s Newspaper Extinction Timeline

The migration of readership from print to online is an inexorable trend today and in his Newspaper Extinction Timeline, futurist Ross Dawson predicts that print editions of newspapers will mostly disappear in the U.S. By 2017, followed in quick succession by newspapers in other countries in subsequent years. Predicts print editions of newspapers to be “extinct in Malaysia, France, Israel and Croatia in 2029, so there’s still life in print in Malaysia for a while yet.

 

In global terms, this trend is driven by changing newsprint costs, more power tablets and e-readers, more powerful and affordable mobile phones, the development of high-performance digital paper, trends in advertising dollar allocations, the development of open platforms and the uptake of digital news monetisation mechanisms.

 

By country, their “extinction” depends on factors such as the availability and cost of mobile and fixed bandwidth, smartphone and e-reader penetration, the economic growth rate, equality of wealth distribution, urban and regional wealth disparity, the financial position of leading newspapers, the balance of advertising and print sales revenue, newspaper distribution structures, age structures, birth rate, immigration, degree of urbanisation, increase in literacy level, the degree of government regulation, censorship and obstruction, government financial support for media, consumers’ media channel preferences, their willingness to pay for news and their relative interest in domestic and world news.

 

This trend is already having a negative impact on media ad revenues and judging from some of the horror stories coming from the U.S. we wonder whether this much touted “future of media” is undermining the future of the media and the future of journalism as a viable paying career.

U.S. newspaper advertising revenue, courtesy Dr. Mark J. Perry, U. of Michigan 

Based upon recent Newspaper Association of America (NAA) figures, Dr. Mark J. Perry, a professor of economics and finance at the University of Michigan published a chart in his blog Carpe Diem showing that newspaper print advertising revenue in the U.S. adjusted for inflation grew steadily from US$20 billion (in 2012 dollars) to a peak of around US$65 billion in 1999, then plunged steadily to an estimated US$19 billion in 2012.

 

“Estimated print advertising revenues of $19.0 billion in 2012 will be the lowest annual  amount spent on print newspaper advertising since the NAA started tracking ad revenue in 1950,” Perry wrote. 

 

Online revenue kicked in around 2001 and when included, resulted in total ad revenue fairing slightly better at around US$22.4 billion in 2012, still cold comfort for publishers.

 

The year 1999 perhaps marks that “tipping point” when the “Web effect” kicked in for publishers in the U.S.

 

Already hundreds of U.S. newspapers such as the Rocky Mountain News, Seattle Post Intelligencer, Christian Science Monitor, Ann Arbor News, Tribune Company, Minneapolis Star Tribune, Philadelphia Newspapers company, Chicago Sun Times, the Journal Register Co., American Community Newspapers, Freedom Communications, Heartland Publications and others have either gone out of business, reduced the frequency of their print editions or phased out print completely and gone all-online, with the loss of thousands of media jobs.

 

The final print edition of the Seattle Post Intelligencer hit the new stands on 17 March, 2009. and it went online-only thereafter, the first U.S. newspaper to do so. The Seattle Post Intelligencer had been losing money since 2000 and was propped up by the Seattle Times until then. Just over two months earlier its owner Hearst Corporation announced that it would either have to close the paper or sell it off, so this move was a reprieve of sorts but still, 140 staff lost their jobs while between 20 and 25 staff remained to man the online-only edition.

 

So far, our searches online found no evidence of the Seattle Post Intelligencer turning a profit.

 

In April 2009, the Christian Science Monitor  opted for a hybrid model of a daily online edition carrying breaking news and a Sunday print edition carrying less time-sensitive features, commentaries and analyses. The Christian Science Monitor is published by the Church of Christ Scientist in Boston which supports it financially.

 

In 2008, its nett losses were US$18.9 million and this move was to cut its losses and for it to break even in 2015. Meanwhile, recent reports say it’s has made progress in cutting losses.

 

Still, print publishers continue to enhance their reach through the Web and more recently on e-readers and tablets but have come up against a Web culture which is averse to paying for content online but instead readers expect it to be free-of-charge or they move to another Web publication, and this forced publishers to look at radical business models , such as online advertising for revenue.

 

However, while financing publications exclusively from online ad revenue seems fine in theory, actual experience, especially in countries with greater connectivity reveals this model is not working as expected.

 

NAA figures posted in September 2012 show US$798 million in print ad losses for the first half of 2012 compared to the same period the previous year. That was only slightly offset by a US$32 million gain in digital ad revenue or a 25:1 losses-to-gains ratio.

 

In its State of the News Media in 2012 Annual report on American Journalism, the Pew Research Centre for Excellence in Journalism wrote, ”In 2011, according to NAA statistics, online advertising was up US$207 million industry-wide compared to 2010. Print advertising, though, was down US$2.1 billion. So the print losses were greater than the digital gains by 10 to 1. That was even worse than a 7-to-1 ratio of print losses to digital gains in 2010. And during 2008 and 2009, steep declines in print were accompanied by small losses in online too.”

 

“Even if the newspaper industry can find a sustainable model online, those ratios mean newsrooms will be much smaller than they were a decade ago,” the Pew report added.

 

According to Rick Edmonds of journalism school, the Poynter Institute, this has resulted in media in the U.S. looking beyond print and digital ad revenue. For example the Dallas Morning News and several hundred other papers have implemented digital pay walls and aggressive price increases for print subscriptions and single copies.

 

The statistics show the industry moving gradually away from its historic 85% reliance on advertising for revenue, a much higher ratio than in most European and Asian countries.

 

Into services
“Newspaper organisations are having some success with non-advertising initiatives like offering Web design and social media services to businesses in their area. And the biggest companies, like Gannett and McClatchy, have profitable stakes in leading electronic classified platforms like CareerBuilder,” wrote Edmonds.

 

Edmonds isn’t optimistic about digital ad revenue either:- “Digital audiences for newspaper organisations, especially traffic to smart phone news, continues to grow at a healthy pace. But after some years of fast growth in the mid-2000s, digital revenues fell during the worst of the recession and have plateaued at a little more than US$3 billion per year. Print advertising still contributes about US$20 billion a year and circulation revenues about US$10 billion.”

 

Since mid-2011, digital ad progress has been particularly slow and while there’s no single cause for it, several factors hurting newspapers are:-

  • Rates are low, depressed by the huge inventory and range of advertising choices on the Internet.
  • Banner ads, the mainstay of website advertising, are not considered especially effective. Recent studies by the Interactive Advertising Bureau now indicate that one-third to half of Web display ads are not even seen because of their placement on a page or because users move off the page before they load.

 

Google’s worldwide ad revenue tops that of U.S. print media combined


 

  • Internet giants like Google, Yahoo and now Facebook continue to grow their advertising and, with Apple and Amazon, have the capital to bring well-funded new products to market every few months.
  • Newspapers don’t begin to match Google and others in search and are only beginning to develop video advertising opportunities, thus missing the fastest area of growth.
  • Despite initial enthusiasm, neither smart phone reports nor tablet offerings are yet delivering significant ad revenues. For smart phones, as with the Web, the great majority of ads are “unbundled” from news reports.

 

Being “Googled” and “Yahooed”
Something often overlooked in digital advertising spending figures and by new media consultants is that advertisers now have a very much wider choice of sites to advertise on, besides digital editions of newspapers and magazines.

 

On 19 October, 2012, Poynter’s Andrew Beaujon quoted MIT Technology Review research editor Mike Orcutt as saying, “In the first half of the year, U.S. Internet sites collected US$17 billion in ad revenue, a 14% increase over the same period of 2011, according to a new report from the Interactive Advertising Bureau. In the second half of last year, websites had US$16.8 billion in ad revenue. So even if growth were to slow in the second half, digital media this year could exceed the US$35.8 billion that U.S. print magazines and newspapers garnered in ad revenue in 2011.”

 

“This development may provide little relief to newspaper publishers for two reasons. First, there’s no guarantee that surging online revenue will flow to them. Jeff Sonderman wrote in May about a presentation by venture capitalist Mary Meeker that showed, as Sonderman wrote, that print media ‘captures much more than its fair share of ad spending, while the Internet and especially mobile are lagging’.” wrote Beaujon. “Second, the convergence is more a function of print revenue’s dramatic tumble than any compensatory rise in online revenue.”

Print ad revenue drops to online revenue level while TV ad revenue is  way ahead and rising
Courtesy Mike Orcutt, MIT Technology Review

At the same time, media market research firm Nielsen reported that television ad spending was worth nearly US$75 billion in 2011, which not only dwarfs both but is rising.

 

In 2005 Beaujon’s colleague Edmonds forecast that online ad revenue would just surpass print ad revenue in 2018 at US$168.1 million versus US$167.9 million.

 

“Of course, there isn’t any reason to believe any of these numbers will remain steady state over time. Most obviously Google, Yahoo, Craigslist and come-from-nowhere competitors we haven’t yet thought of can be expected to launch missiles into the media mix as soon as 2005 and 2006. It doesn’t look like the industry has a 14-year or even five-year window of calm weather to reinvent its business model,” Edmonds opined.

 

Adding to that, Beaujon believes Facebook will become one of those new non-media competitors. “Much of the online revenue that is surpassing print now goes to those ‘pure play’ enterprises, not news organisations,” he wrote.

 

On 12th November, 2012, Will Oremus wrote in Slate that “Google has officially eaten the newspaper industry.” He cited a chart by Statista’s Felix Richter showing that Google earned US$20.8 billion in ad revenue worldwide in the first six months of 2012, versus US$19.2 billion in print ad revenue earned by U.S. newspapers and magazines combine during that same period.

 

“Given the fact that Google operates globally, the comparison is obviously unfair and shouldn’t be judged scientifically, but nonetheless it shows how big Google’s ad business really is and how small print advertising has become,” Richter wrote.

No sign of “extinction” yet
According the Audit Bureau of Circulations Malaysia, total average print newspaper circulation of Malay, English and Chinese papers combined in Peninsular Malaysia rose from 3,672,942 in the 1 July 2005 to 30 June 2006 period to 4,199,360 in the first half of 2011 and to 4,404,457 in the first half of 2012. These figures include free and controlled newspapers such as The Sun, Malaysia SME and Red Tomato.

 

Likewise, grand total average daily circulation figures for three languages in East Malaysia (Sabah & Sarawak) grew from 394,864 in the 2005/2006 period to 546,467 in the first half of 2011 and 576,025 in the first half of 2012.

 

By language in Peninsular Malaysia, Malay language circulation was the largest and went from 1,746,947 in the 2005/2006 period to 2,171,761 in H1 2012, while Chinese language circulation grew from 806,487 to 866,917 over those years.

 

The only “loser” over those years were the English language papers whose circulation fell from a high of 944,879 in 2005/2006 to 813,994 in H1 2012, with minor fluctuations over these years.

 

Within the paid English segment, circulation of the News Straits Times fell from 139,468 in 2005/2006 to a low of 98.920 in H1 2011 but it picked up to 100,382 in H1 2012, while that of The Star weekday edition fell from 310,008 in 2005/2006 to a low of 278.961 in H2 2010 but picked up and grew to 290,566 in H1 2012. Circulation of the New Sunday Times and Sunday Star were higher.

 

In the free English segment, circulation of The Sun grew from 175,179 in 2005/2006 to 301,853 in H1 2012. Figures for Malaysia SME were first included in the H2 2007/H1 2008 period when it was 44,667 and rose to 50,053 in H1 2012.

 

Significant among Malay papers in Peninsular Malaysia is the decline in circulation of the “serious” dailies – namely Berita Harian and Utusan Malaysia, as well as their Sunday counterparts, which was more than made up for by an increase in circulation of light-reading papers – namely Kosmo and Harian Metro, and their Sunday counterparts.

 

For example, circulation of Berita Harian fell from 203,704 in 2005/2006 to 144,955 in H1 2012, while that of Harian Metro went from 249,575 to 394,026 between those years, while its Sunday counterpart Metro Ahad went from 263,649 to 434,988, which is the largest among Malay language papers in Peninsular Malaysia.

 

Over in Sabah, Malay paper circulation grew the fastest from 14,631 in 2005/2006 to 50,840 in H1 2012, while Chinese paper circulation went from 68,373 in 2005/2006 to 56,227 in H1 2012, with rises and falls during each period along the way, with the peak of 94.025 in the 2007/2008 period.

 

English paper circulation in Sabah fell from 79,164 in 2005/2006 to 51,208 in H1 2012, with a peak of 114,885 in 2008/2009.

 

However in Sarawak, English circulation more than doubled from 60,708 to 151,403 over those years, Malay circulation rocketed from 11,124 to 81,438, while Chinese went from 164,846 to 184,909 between those years, with a peak of 238,192 in 2008/2009 and 123,324 in H2 2010.

 

ABC Malaysia introduced a new category entitled Digital Replica – i.e. circulation of paid electronic editions of print newspapers. Among these, average nett circulation per publishing day of English-language editions was the largest at 15,816 copies in H1 2012, with digital editions of The Star and Sunday Star taking the lion’s share of 7,722 and 7,925 respectively and their basic cover price was US99 cents for each copy. circulation of digital editions of the New Straits Times and New Sunday Times was a tiny 135 and 134 respectively.

 

Total average nett circulation per publishing day of digital editions of Malay papers Berita Harian, Harian Metro and their Sunday counterparts Berita Minggu and Metro Ahad was 776, with circulation of each being close to 200.

 

Circulation of print magazines in H1 2012 ranged from 15,078 for Business & Financial to 131,191 for the weekly Malay language women’s magazine Mingguan Wanita. Over previous years, magazines featuring women’s fashion & beauty, television & entertainment, general interest, lifestyle, and food & beverage have had the highest circulation from 100,000 to over 300,000.

 

Last say
These figures show that despite shifts in print circulation in Malaysia and undoubtedly more people obtaining their news and information online, overall print circulation in Malaysia shows no signs of heading for “extinction” just yet but is holding up and even increasing.

 

Subscriptions and purchases of digital replicas is still very small, with the The Star and Sunday Star taking the lion’s share of this tiny “pie,” while there is little uptake among New Straits Times, New Sunday Times and Malay language readers.

 

This also suggests that much of the talk we hear about print publication in Malaysia “dying” could either be due to ignorance, parroting of such loose chatter, political bias or a bias towards new media for personal , professional or commercial reasons.

 

However, circulation is not the only issue at stake here, as based upon anecdotal evidence, the newspapers seem to be facing pressures from falling advertising revenue, due to a larger number of competitors for advertising dollar.

 

In that case, a lower circulation is beneficial since it helps save costs, while increased circulation in the face of falling ad revenue is a liability, unless an increase in circulation revenue can keep the paper profitable. 

 

On the other hand, will print media every become obsolete in Malaysia and other countries as Dawson predicts?

 

I guess nobody really knows. I don’t and Malaysia is still 16 years away from when his predicted “extinction” is supposed to happen and a lot can happen before then.

 

Among the many tangible factors Dawson gave for “print extinction” in each country – i.e. broadband penetration, availability and affordability of devices, regulatory, etc., he also cited intangibles such as customer preference and habit.

 

For example, why would print newspapers be “extinct” in France at the same time as Malaysia, Israel and Croatia. After all France is technologically advanced, affluent country with a first-world infrastructure, while Israel is strong in communications technologies.

 

I don’t really know why but perhaps it could be due to language. The major language on the Internet is English, which many French don’t speak or dislike even if they do, while Israelis speak Hebrew, though we don’t know how extensive is Israel’s broadband infrastructure, their Internet penetration nor how many Israelis run around with iPads. Heck! Do most Malaysians run around with iPads or Android tablets, and will there ever come a time when every Malaysian does?

 

It could also be a matter of culture – i.e. a general preference for reading something in print than online.

 

Speaking for myself, while I read most of the news online these days, on those rare occasions when I read a print newspaper, I find it provides a far superior reading experience than on the Web, especially when reading feature articles on lifestyle, nature, art, culture, in-depth analyses or commentaries than just the news.

 

Despite all efforts to create an appealing, easily navigable layout, that single Web browser window is simply too small to present everything prominently, unlike a print newspaper or magazine where each page stands on its own in its full glory.

 

While e-paper and tablet editions have managed to replicate the look and feel of the real thing to some extent, still it’s a just a likeness, just like how chatting with a loved one in a video call is the nearest to speaking to him or her in person, but still it can’t replace speaking face-to-face in person.

 

So could the current trend towards digital readership come full circle back to print, just as digital watches, popular in the 1980s, came full circle to quartz or mechanical analogue watches in the 1990s and until today?

 

Remember those VHS home video players which were supposed to have caused cinemas like Cathay, Federal, Pavilion, Capitol, Odeon, Rex and others to close down in droves in the 1980s and were turned into churches, furniture stores, etc. But today, people are willing to pay ten times as much to watch a film in one of those fancy cineplexes in shopping malls.

 

The cinema is dead, LONG LIVE THE CINEMA!

People were saying that the cinema is “dead,” but as it turned out, LONG LIVE THE CINEMA!. Perhaps someone in the future might say, “Print media is dead, LONG LIVE PRINT MEDIA!.”

 

So what can publishers do to adapt to and survive the rapid, wrenching transition the media is going through today. How can they embrace rapid technological changes in media to their advantage?

 

Here are some suggestions:-

  • Always remember that you are a messenger and different technologies and media are just vehicles to convey your message, so choose each technology or medium as appropriate for your purpose.
  • Don’t deploy a new technology or medium just because it appears “cool,” since you could end up making it your purpose.
  • Don’t blindly believe what some technology or new media consultant or advocate tells you, but research and analyse the validity of their claims and advice within the context of your organisation’s objectives, and its relevance and suitability within your existing local conditions.
  • The hybrid digital and print model of the Christian Science Monitor seems to be working right, so print media may want to consider emulating it, with time-sensitive news articles published online while lengthier, non time-sensitive features, analyses, commentaries and so on are published in print.
  • Focus on carrying more features and analyses with lasting reference or archival value in your print edition, since you can also put them behind a pay-wall online.
  • Reduce the amount of syndicated foreign news carried, since readers can bypass you to read them on foreign sites earlier and moreover, your competitors will quite probably be carrying them too, which dilutes their uniqueness.
  • Think global, act local. Always remember that your reporters are your front-line troops who are first to get the story from the ground. Their reports are original and have the greatest value, which can be shared globally, perhaps even for a syndication fee. As a former editor of an industry IT website, I saw that articles which received the most hits over an extended period were reviews of products or services which we tested,, reports about local industry events such as launches and exhibitions, one-on-one interviews, local news reports and so on, while reports written from press releases or from information in foreign media reports, did not attract as many hits in the long term.

 

 




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